Can the U.S. Make Manufacturing Grow?

Can the U.S. Make Manufacturing Grow?

I’ve got to be honest. Most of the press releases in business and government seem more like ambiguous spin-talk than actual information. They usually sound something like this: “We are developing strategies that lead to solutions through investing in our global market presence.”

Boiled down it means this: “We are doing more stuff to sell more things to more people.”

In the immortal words of Ron Swanson, "Bully for you."

 

ill_ronswanson                                                                              Source: Andrewellis.com

 

I want to know, “What are you specifically doing and why will it work?”

Since Mixer Direct is the in the manufacturing business, I thought it would be appropriate to tackle news stories and press releases about the industry that are full of ambiguous spin talk and gobbledygook in an effort to simplify them. Hopefully, this will make those press releases a bit more helpful for you and your business.

New Manufacturing Communities

I saw a bunch of headlines pop up about how the Obama administration designated 12 communities as new “Manufacturing Communities.” As I looked at the links and the news stories I didn’t find anything helpful. Everyone was quoting the same White House Fact Sheet. All I learned was that 12 cities had been chosen to be a part of “an initiative to spur communities to develop integrated, long-term economic development strategies that strengthen their competitive edge in attracting global manufacturers” (AKA “doing things to sell stuff to more people”).

Essentially, the articles could have been summed up in their titles: “White House designates 12 'Manufacturing Communities.”

And that was all she wrote. Literally. There was no “how” or “why” this was going to work. I felt like they might as well have said, “We like these 12 cities. Hopefully they grow. What’s for lunch?”

So what is actually going to happen in these twelve cities that will make manufacturing companies want to set up shop in those towns?

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The History

To understand why this is a big deal, you have to understand where this project sits in history.

 

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                                                                  Source: returntothe80s.wordpress.com

The act of putting together an official government policy in order to boost an industry is called “Industrial Policy” (who would have thought, right?) For those too young or remember or too old to recall, this was a huge point of contention in the 1984 election. Democrats were saying that the USA’s industrial markets had failed and could not make an economic turn around. Republicans were saying that things would be great if the government would just get out of the way. Reagan won the election and industrial policy wasn’t utilized.

Here we sit 30 years later and the White House has planned and executed an industrial policy without much hubbub. Why? Mostly because it’s not an election year and most Americans forget the government exists until gas prices go up. It may also have something to do with the fact that people are so concerned with creating jobs right now that they don’t care how it happens. If this plans works, it could send America down a more socialized economic path. If it fails, then you can bet it will send us racing in the other direction towards pure capitalism. But again, let’s figure out what they are trying to do before we evaluate it.

The Plan

Back in September of 2013, a few government agencies gave out $7 million in grants to 44 cities to boost their manufacturing industries. Lots of jobs were created from these grants, so the Obama administration decided to create a competition using the same idea. The competition was for cities to put together proposals on why their areas should receive special government help in boosting their appeal to be sites for manufacturing companies. The areas that won would then have access to $1.3 billion in order to gussy themselves up to attract manufacturing businesses. Last week, the following twelve winning regions were announced.

Southwest Alabama

Southern California

Northwest Georgia

The Chicago metro region

South Kansas

Greater Portland region in Maine

Southeastern Michigan

The New York Finger Lakes region

Southwestern Ohio Aerospace Region

The Tennessee Valley

The Washington Puget Sound region

The Milwaukee 7 region

Summaries of the plans that each of these cities submitted can be found the press release about the competition on the EDA’s (Economic Development Administration) website, but let me save you some time. They all promised to spend money on workforce training, research, better roads, better ways to deliver products, gaining international clients, improving the way they make what they are making, and capital access. In order to spend the money the cities will have to run their expenditures by one of the eleven agencies overseeing the $1.3 billion.

The Outcome

This is where it gets interesting, and perhaps the reason those articles didn't have much more information than they did. We don’t really know what is going to happen. If the $1.3 billion is spent well and these communities become a driving force in America’s resurgence as a manufacturing powerhouse, then you can bet we’ll see more industrial policy. If these communities can’t get through the government’s red tape to spend the money or if the spending doesn’t create any revenue, then whole project ends up being an economic bust. From that point then you can bet we won’t see anything like this again for a long time.

So what do you think? Will the project work like intended? Will it flounder amidst all the government interference? Should the government give special attention to markets like manufacturing rather than service industries? Share your thoughts in the comments below.

tagged with manufacturing, Industry, industrial policy, obama administration, government